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Pharma Partnering Trends Revealed: 2018 Edition

Comprehensive report and expert insight on partnering activity as seen at BIO-Europe®

2 / September 2018 © Informa UK Ltd 2018 (Unauthorized photocopying prohibited.)

When you experience the choreography of tens of thousands of face-to-face meetings at BIO-Europe®, you know for certain that partnering is still the deal in the biotech industry. From nearly 1,000 partnering booths, executives from across the industry value chain pitch assets, exchange ideas, and navigate existing collaborations. What are the implications of those meetings for real therapies, treatments and cures? Which diseases grab the most attention, and whose negotiations will result in an important strategic partnership? This energy helps foster the amazing innovations we’ll see in the future.

Last year, BIO-Europe attendees sent nearly 127,000 meeting requests, which resulted in over 24,000 meetings. This included first contacts between emerging startups and potential partners, meetings between biotech and pharma, and negotiations between private and public companies. The most common company pairings, most sought after

therapies, and most lucrative assets change every year; this report will provide an aggregate view of developing trends.

We first looked at this data in-depth two years ago; it was a multi-year analysis examining event data from 2012–2015, or, one hundred thousand meetings. Last year, we added data from 2016, and this year’s report adds 2017 data to that total, revisiting the alliances, dealmaking activity, and opportunities that will continue to turn the wheel of drug development at each BIO-Europe international partnering event. We’re looking forward to what 2019 will bring and to share this report that will provide you some strategic insight for your next deal!

Anna ChrismanGroup Managing DirectorEBD Group

Each year new trends emerge in the pharma and biotech industry, often the result of new therapies born out of innovative technologies, regulatory changes, and the global economic climate. But despite all the business shifts, collaboration continues to propel drug portfolios from discovery through commercialization. For the third year, Pharma Intelligence and EBD Group continue their own collaboration to identify key trends around core elements of the partnering journey, by assessing the potential opportunities for currently unpartnered assets, revisiting the relationships built through in-person meetings at BIO-Europe, and analyzing the dealmaking activity from the last year. By combining data from Pharma Intelligence’s Medtrack

and Strategic Transactions with anonymized meeting data from BIO-Europe 2017, this report demonstrates the ongoing appetite for alliances to share the risks intrinsic to drug development as well as the reward of hopefully bringing new treatments and cures to market.

Authors:Patricia Giglio, Content Manager, MedtrackPatricia Reilly, Vice President, Intelligence Alliances and UnificationDoro Shin, Content Marketing Director, Pharma IntelligenceSteven Muntner, Vice President, BD&L

Introduction

September 2018 / 3© Informa UK Ltd 2018 (Unauthorized photocopying prohibited.)

It is well established that larger pharma and biotechs benefit from alliances to expand into new markets or grow their pipelines without having to invest in internal discovery and development costs. In return, smaller companies are provided with funding necessary to advance their programs. The model also works well for smaller cash-rich pharma aiming to establish themselves in the industry by investing in niche markets or areas of unmet need. This paradigm is manifested in public and private companies alike: 86% of public companies and 67%

of private companies currently have partnered drugs in their pipelines [Figure 1].

But while collaboration is beneficial for both, the process of identifying potential partners varies significantly between public and private companies. We once again analyzed the current unpartnered pipelines of both sectors across the globe to seek hidden opportunities and new trends that may be evolving.

Profile of an Opportunity: A Company Perspective – 2018 Update

Figure 1. Companies with drugs in development, overall and partnered

Source: Medtrack 2018

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Identifying an attractive partnering opportunity requires a strategic analysis of both the drug candidate and the company developing it. We found the current distribution of unpartnered assets of both company types follow similar patterns, and are relatively unchanged from what we observed in our previous analysis. Once again trends indicate partnering opportunities are most abundant when compounds are at the very early stages of development and diminish quite considerably once drugs enter the clinic [Figure 2]. This trend clearly reflects the investment cycle of drug development. Licensing a drug during discovery and preclinical

testing typically warrants lower upfront and milestone payments than those that advanced to later-stage trials. This is most evident with private companies as they experience a more drastic decline in unpartnered assets between preclinical and Phase I than their publicly-traded counterparts. By Phase III, relatively few partnership opportunities remain with either company type. At this stage, assets are valued at a premium, garnering higher royalty rates and upfront payments. But due to the decreased risk and greater potential for return on investment, Phase III drug candidates are still feasible options for collaboration.

Although the distribution of their unpartnered assets follows a similar pattern, identifying a suitable partner among private and public companies requires a different approach. We analyzed the unpartnered development pipelines of global private and publicly-traded companies and applied different strategies to each group to uncover opportunities for collaboration. For purposes of this analysis all products in discovery through Phase III (at their highest phase of development, including branded, biologics and investigational) were included even if

the companies were no longer actively developing the products (active development is defined as any reported product development within the past two years). After two years of inactivity, the candidates are considered “no development reported” or NDR. These NDR candidates were included since they could be of considerable value to a new partner/acquirer. Any acquired companies that are subsidiaries of larger companies were excluded from the analysis.

Unpartnered pipelines

Figure 2. Opportunity distribution by phase


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Opportunities among private companies across all therapy areasBased on the criteria described above, we ranked the top 25 private companies with the greatest number of unpartnered products still in development [Table 1]. Just as in our previous analysis, the group includes companies from around the world, with most having very early stage unpartnered pipelines. Exceptions are established companies like Boehringer Ingelheim and Pierre Fabre SA with unpartnered assets more evenly distributed across all development phases, indicating their ability to develop their portfolios independently. Several new companies made it to the list this year with an abundance of partnering opportunities. A recent 250 million USD series B financing will enable HitGen to enhance its DNA-encoded library (DELs) technology for innovative drug discovery research. Its expanding DELs have already led to collaborations with

numerous industry leaders, and this investment will open the door for more alliances in drug development. Moderna Therapeutics has a long-term strategy to leverage the potential of its mRNA platform in infectious diseases, immuno-oncology, rare diseases, and cardiovascular diseases through individual development and collaborations with strategic partners. In fact, almost half of its current pipeline is partnered. Recursion Pharmaceuticals is rapidly expanding its drug discovery efforts into immunology and inflammation (I&I), immuno-oncology, and infectious disease (ID). A recent leadership announcement indicates the company intends to pursue strategic partnerships, especially in developing new therapies in indications of high unmet need.

*By highest phase of development; total product count includes those products in active development and those with no development reported in the past two years**Previous rank of companies from 2017 published paper

Table 1. Top 25 private companies by number of unpartnered products*


Company Name Prior Rank** Country Research Preclinical Phase

IPhase

IIPhase

IIITotal

ProductsVichem Chemie Research Ltd 1 Hungary -- 56 -- -- -- 56Boehringer Ingelheim International GmbH 2 Germany 2 10 21 14 4 51Cellix Bio Private Limited -- India -- 40 -- -- -- 40Recursion Pharmaceuticals LLC -- United States -- 38 -- -- -- 38Lipicard Technologies Ltd 3 India 2 34 -- -- -- 36Akeso Biopharma Inc 25 China -- 29 5 -- -- 34Druggability Technologies Holdings Ltd 10 Malta -- 24 3 5 -- 32BL&H Co Ltd 4 Republic of Korea 32 -- -- -- -- 32Aphios Corporation 5 United States 3 26 -- 1 1 31Microbiotix Inc 6 United States 2 28 1 -- -- 31Pierre Fabre SA 8 France 2 12 5 8 3 30NAL Pharma 9 Hong Kong 28 -- -- 1 -- 29NovaLead Pharma Pvt Ltd 11 India -- 27 -- 1 -- 28Biomay AG 12 Austria 12 12 2 1 -- 27Biocidium Biopharmaceuticals -- Canada -- 26 1 -- -- 27Nerviano Medical Sciences 13 Italy -- 21 2 3 -- 26Celprogen Inc 14 United States -- 26 -- -- -- 26Chiesi Farmaceutici SpA 23 Italy -- 12 3 8 1 24Chronos Therapeutics 16 United Kingdom -- 23 1 -- -- 24HitGen Ltd -- China -- 24 -- -- -- 24LEO Pharma A/S -- Denmark 2 3 7 9 1 22Moderna Therapeutics -- United States -- 17 4 1 -- 22Cancer Research Technology 17 United Kingdom 4 15 2 1 -- 22SOM Biotech SL 21 Spain -- 20 1 1 -- 22Biomar Microbial Technologies 18 Spain 1 20 -- -- -- 21


Opportunities among private companies in oncology Because oncology indications continue to dominate drug development, we once again ranked the top 25 global private companies by number of unpartnered cancer drugs to uncover opportunities exclusive to this space. As expected, there is overlap with the other group (highlighted in Table 2) but viable options for collaboration still exist. For example, Treos Bio Limited is developing precision cancer immunotherapies and a recent leadership appointment indicates its desire to raise capital and engage in partnerships to advance its pipeline

as it began its first-in-man trial. Specialty pharma company Druggability has publicly announced their willingness to pursue external collaborations to advance their programs which use their proprietary Super-API drug development platform. Chinese drug discovery company Shanghai De Novo Pharmatech recently got approval from the FDA and CFDA to begin clinical trials of its immune-oncology therapy, DN1406131. A partnership with any of the companies on the list could prove beneficial for all parties.

Company Name Prior Rank** Country Research Preclinical Phase

IPhase

IIPhase

IIITotal

ProductsVichem Chemie Research Ltd 1 Hungary -- 36 -- -- -- 36Nerviano Medical Sciences 2 Italy -- 21 2 3 -- 26Akeso Biopharma Inc 20 China -- 20 4 -- -- 24Celprogen Inc 3 United States -- 23 -- -- -- 23Cancer Research Technology 4 United Kingdom 4 15 2 1 -- 22ABL Bio 19 Republic of Korea -- 17 1 -- -- 18Chikujee Therapeutics 6 United States 15 2 -- -- -- 17BL&H Co Ltd 7 Republic of Korea 16 -- -- -- -- 16Syntab Therapeutics 8 Germany -- 16 -- -- -- 16Supratek Pharma Inc 9 Canada 2 12 -- 1 -- 15Icell Kealex Therapeutics 15 United States -- 14 -- -- -- 14ImmuneOnco Biopharma 10 China -- 14 -- -- -- 14L.E.A.F. Pharmaceuticals LLC 11 United States -- 14 -- -- -- 14Nanjing Sanhome Pharmaceuticals Co -- China -- 13 -- 1 -- 14Quimatryx 13 Spain 2 12 -- -- -- 14Treos Bio Limited -- United Kingdom -- 13 1 -- -- 14Aphios Corporation 14 United States -- 12 -- -- 1 13HitGen Ltd 24 China -- 13 -- -- -- 13AbGenomics International Inc 18 United States -- 10 2 -- -- 12Boehringer Ingelheim International 16 Germany 1 2 5 4 -- 12Eutilex 17 Republic of Korea -- 8 3 1 -- 12Shanghai De Novo Pharmatech Co Ltd -- China -- 11 1 -- -- 12Beta Pharma Inc 21 United States -- 10 1 -- -- 11Druggability Technologies Holdings -- Malta -- 7 1 3 -- 11Biosceptre International Limited 22 United Kingdom 1 9 1 -- -- 11

Table 2. Top 25 private companies by number of unpartnered oncology products*




Public company analysis – all therapy areasAs mentioned previously, different strategic approaches are necessary when identifying potential partners based on company type. We re-evaluated the collaborative opportunities with public companies again this year by leveraging burn rates to identify companies that are in need of raising capital. Companies with promising pipelines but less than two years in cash remaining may consider partnering as an alternative to a pure financing, thus enabling them to pursue development while sharing the overall cost.

Table 3 represents the top 25 global public companies with less than two years of cash left (as defined by cash on the latest balance sheet/annual cash burn rate), ranked by total number of unpartnered products across all therapy areas. In contrast with the private companies, most of the publicly-traded companies that made the list are US-based. The development phases of the unpartnered products are similarly distributed as those of the private companies with the majority in very early phases of development offering a wealth

of partnering possibilities. But those with advanced pipelines should not be overlooked as they may be seeking to divest assets or share development costs to advance their portfolios through the clinic.

Of those new to the ranking this year, only Immuron, KemPharm and Novavax have commercialized drugs developed without partnerships, highlighting the collaborative nature of the group. And despite many receiving funding through secondary offerings this past year they still may be eager to offset development costs through partnerships. Once again, Immunomedics and Omeros top the list with the largest number of unpartnered drugs in their respective pipelines. Next in line is Compugen with 36 unpartnered assets. The immuno-oncology company recently raised $21 million in a private placement and intends to use the funds to advance its portfolio. However, partnering remains a key component in its business strategy. Absent from the list this year is Sorrento Therapeutics, which had a successful year with the approval of ZTlido and the IND filing of CD38 CAR-T therapy.

Table 3. Top 25 public companies with < two years in cash by number of unpartnered products*



Company Name Prior Rank** Country Years

in Cash Research Preclinical Phase I

Phase II

Phase III

Total Products

Immunomedics Inc 1 United States 1.71 2 38 1 11 -- 52Omeros Corporation 2 United States 1.06 -- 48 -- 2 -- 51Compugen Ltd -- Israel 0.73 -- 36 -- -- -- 36Novavax Inc -- United States 0.77 1 24 2 1 -- 28Lexicon Pharmaceuticals -- United States 1.93 -- 21 -- 4 -- 25Zosano Pharma 4 United States 0.12 -- 18 5 -- 1 24Marina Biotech -- United States 0.01 1 15 7 -- -- 23Celldex Therapeutics -- United States 0.7 -- 15 3 1 -- 19IntelGenx Corp -- Canada 0.5 3 9 3 3 -- 18Pivot Pharmaceuticals Inc -- Canada 0.53 -- 17 -- -- -- 17Affirmed Therapeutics AG -- Germany 1.8 2 14 1 -- -- 17ProQR Therapeutics NV -- Netherlands 0.87 -- 15 -- 1 -- 16Lipocine Inc -- United States 1.47 2 10 1 3 -- 16ArQule -- United States 1.52 -- 12 4 -- -- 16Anavex Life Sciences Corp 5 United States 1.46 -- 14 -- 1 -- 15Helix BioMedix Inc 7 United States 0.08 2 12 -- -- -- 14Stemline Therapeutics Inc -- United States 1.39 -- 14 -- -- -- 14Immuron Ltd -- Australia 0.11 3 4 1 4 1 14Oncobiologics Inc -- United States 0.15 1 11 -- -- -- 12Medlab Clinical LTD -- Australia 0.19 -- 11 -- 1 -- 12Onconova Therapeutics Inc -- United States 0.35 -- 12 -- -- -- 12Apricus Biosciences Inc 8 United States 0.57 2 9 -- 1 -- 12KemPharm Inc -- United States 0.65 -- 10 1 -- 1 12Rigel Pharmaceuticals Inc -- United States 1.08 -- 11 1 -- -- 12Inovio Pharmaceuticals Inc -- United States 1.16 -- 6 4 2 -- 12


Oncology prospects among public companiesWe also re-evaluated the top 25 global publicly traded companies by number of unpartnered oncology products based on burn rate. Excluding the overlap from the list of companies with pipelines from all therapy areas (highlighted in Table 4), additional opportunities emerge this year for collaborating in the oncology space. Many of the unpartnered opportunities are unpartnered oncology pipelines specialized in immunotherapies. Despite these promising programs, limited cash flow may impede development moving forward. Forming an alliance with any of these companies could prove to be a favorable investment.

For example, Australian Patrys Limited has strong intellectual property rights for its 3E10 technology in the US, China and Japan, strengthening its position

in these markets. Its humanized form of Deoxymab 3E10, PAT-DX1 and its nanoparticle-conjugated form, PAT-DX1-NP DX1 are each progressing toward the clinic showing applications across a wide range of malignancies such as gliomas, melanomas, prostate, breast, pancreatic and ovarian cancers. Cellular Biomedicine Group Inc develops proprietary cell therapies for the treatment of cancer and degenerative diseases. The company has several cutting-edge CAR-T and BiCAR-T programs that are still available for co-development. Another notable opportunity is with Avacta Group, which has multiple assets which target common immune checkpoints. It is actively seeking partners to further develop those assets, or in-license a program through collaboration.

Table 4. Top 25 public companies with < two years in cash by number of unpartnered oncology products*



Company Name Prior Rank** Country Years

in Cash Research Preclinical Phase I

Phase II

Phase III

Total Products

Immunomedics Inc 1 United States 1.71 -- 37 1 11 -- 49Compugen Ltd -- Israel 0.73 -- 17 -- -- -- 17ArQule -- United States 1.52 -- 11 4 -- -- 15Stemline Therapeutics Inc -- United States 1.39 -- 14 -- -- -- 14Omeros Corporation 3 United States 1.06 -- 13 -- -- -- 13Affirmed Therapeutics AG -- Germany 1.8 1 11 1 -- -- 13Avacta Group plc -- United Kingdom 1.2 -- 12 -- -- -- 12Onconova Therapeutics Inc -- United States 0.35 -- 11 -- -- -- 11Patrys Limited -- Australia 0.59 -- 10 -- 1 -- 11Anavex Life Sciences Corp 4 United States 1.46 -- 11 -- -- -- 11Oncobiologics Inc -- United States 0.15 1 8 -- -- -- 9Celldex Therapeutics -- United States 0.7 -- 7 2 -- -- 9Advaxis Inc -- United States 0.64 -- 8 -- -- -- 8Inovio Pharmaceutical Inc -- United States 1.16 -- 4 2 2 -- 8Cyclacel Pharmaceutical Inc -- United States 1.48 -- 7 1 -- -- 8Aquinox Pharmaceutical Inc -- Canada 1.64 -- 8 -- -- -- 8Cellular Biomedicine Group Inc -- United States 1.64 -- 4 -- 4 -- 8Northwest Biotherapeutics 9 United States 0 -- 3 1 3 -- 7Lixte Biotechnology Holdings Inc 8 United States 0.52 -- 6 1 -- -- 7GTx Inc 10 United States 0.85 -- 6 1 -- -- 7Sprint Biosceience AB -- Sweden 0.94 -- 7 -- -- -- 7Multicell Technologies Inc -- United States 1.11 -- 7 -- -- -- 7Medicenna Therapeutics Corp -- Canada 0.61 -- 5 -- 1 -- 6Heat Biologics Inc 12 United States 0.74 -- 5 -- 1 -- 6Midatech Pharma Plc -- United Kingdom 0.82 -- 6 -- -- -- 6


Building Relationships at BIO-Europe®

Pharma Intelligence examined partnering trends based on meeting activity from BIO-Europe between 2012 and 2017, using data from the partneringONE® database, which was provided by EBD Group. The dataset was limited to companies attending fall BIO-Europe events between 2012 and 2017 and who were designated as Pharma and Biotechnology – Therapeutics and Diagnostics (Biotech). If companies chose to disclose additional metrics, these could include employee number, country, therapeutic area, and products (phase, therapeutic sector, molecule type, and partnering status). Since not all companies provided the same level of detail in their profiles, an element of reporting bias

may have an impact on observations derived from the data. As with previous data, all company and product statistics were anonymized, and included the assignment of a different anonymous ID per company each year.

In the following analysis, the meeting requester is designated as the “From company” while the recipient of the meeting request is the “To company.” The companies meeting will be referred to as “pairs” or “pairings.” Only requests that resulted in pairings are considered. Pending and rejected requests, such as those that were declined or cancelled, were excluded from the analysis.

Table 5. Overview of BIO-Europe meeting activity, 2012–17

Source: partneringONE® 2018

2012 2013 2014 2015 2016 2017Total “From company” requests resulting in meetings 6596 7447 7691 7761 8712 10391

# “From company” requests resulting in meetings1 to 5 254 306 308 331 327 3606 to 10 204 231 236 223 258 31211 to 20 169 191 175 204 231 24521 to 30 38 35 53 41 48 5331 to 40 15 11 12 11 14 2641 to 50 6 6 7 6 4 3>50 2 8 7 8 9 16Total “From companies” with meetings 688 788 798 824 891 1015

Average # of meetings per “From company” 9.6 9.5 9.6 9.4 9.8 10.2

An overview of BIO-Europe meeting activityAn examination of Table 5 shows a steep increase in the total number of meeting requests of “From” companies over the past 6 years, from the 2012 meeting to 2017 meeting, with a percent change of 57%. Similar to the jump seen in 2013 in which a 13% increase in the number of meeting requests was paired with a 15% percent increase in the number of companies requesting meetings, 2017 had a 19% increase in the number of meeting requests and a 14% increase (YOY from 2016) in the number of companies requesting meetings.

Single companies requesting 1 to 5 meetings had remained steady over the previous timeframe

(2011-2016) of the study, followed by 6 to 10. However, in 2017 there was a slight rise in requests for 1 to 5 meetings (10%) and an even larger rise in requests for 6 to 10 meetings (21%). In contrast in 2016, the number of companies requesting 1 to 5 meetings dropped by 1%, while companies requesting 6 to 10 meetings rose about 16%. Single companies requesting 11 to 20 meetings and 21 to 30 meetings remained relatively the same. Once again in this year’s analysis, a smaller cohort of companies made more than 20 meeting requests, but we did note a doubling in the number of requests for 31 to 40 meetings [Table 5].


Previously, the most common pairing each year was consistently Biotech to Pharma (B to P), followed by Pharma to Pharma (P to P) and these still clearly lead in the number of meetings at BIO-Europe. P to P meeting activity had steadily increased; however, in 2017, P to P meetings surpassed B to P meetings. Pharma seems more willing to meet in a partnering setting with their peers than in the past. Interestingly, all the sector pairings showed

an increase in meeting activity last year with companies requesting more meetings. Biotech companies are increasingly looking towards their peers for partnering opportunities, and Pharma is significantly increasing the number of meeting requests with Biotech companies to ascertain partnership opportunities between the two sectors [Figure 3].

Figure 3. Number of BIO-Europe meetings between sectors, 2012–17


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Table 6 provides an overview of the top 10 location pairings by year. As in previous years, US-based companies have the largest representation at BIO-Europe in 2017 and meetings between US-based companies continues to lead by far YOY. There was again an increase in the number of meetings requested by United Kingdom companies to US companies, and a real jump in the number of meetings requested from Japanese companies to US companies, as well as from South Korean companies to US companies. There was a slight increase in the number of meetings sought by US companies with Germany and Japan, while there was a noticeable decrease in the number of meetings between the US and France, and Germany requests to US companies. All pairings in the top 10 include the US as either the meeting requester or recipient except for the Germany to Germany pairing.

Last year South Korea did not make the top 10

list after being present in this group on an almost annual basis. This year South Korea had a strong number of meeting requests to US companies as Korean companies looked toward the US for opportunities [Table 6].

Removing the US from the meeting mix reveals once again Germany to Germany and UK to UK as the top pairings in 2017, followed closely by pairings between the UK and Germany, with the UK seeking opportunities with Germany much more frequently than the reverse of Germany looking toward the UK. Japan was a more noticeable presence in pairings at BIO-Europe in 2017, meeting with the UK, Germany, and France. In contrast, Japan barely made the Top 10 list in 2016 with one pairing category of Japan to France. Pairings between the UK and France, France and Germany, and Germany with the UK remained steady. Switzerland did not make the Top 10 list for meeting pairings in 2017 [Table 7].

Table 6. Top 10 country pairings at BIO-Europe 2017 by meeting count

Table 7. Top 10 non-US country pairings at BIO-Europe 2017 by meeting count

Source: partneringONE® 2018 Source: partneringONE® 2018

Countries of pairings 2017 2016United States to United States 405 314

United Kingdom to United States 223 190

Japan to United States 204 109

United States to Germany 199 188

United States to United Kingdom 175 179

United States to Japan 166 145

Korea, South to United States 165 120

United States to France 135 145

Germany to United States 134 156

Germany to Germany 123 117

Countries of pairings 2017 2016Germany to Germany 123 117

United Kingdom to United Kingdom 118 119

United Kingdom to Germany 111 107

Japan to United Kingdom 105 51

Japan to Germany 93 61

Japan to France 88 66

United Kingdom to Japan 81 58

France to Germany 78 78

Germany to United Kingdom 77 68

United Kingdom to France 73 71


Table 8. Top 10 company size pairings by meeting count at BIO-Europe 2017


* Company size comparison is relative to the From company. i.e. < indicates the From company is a smaller company size than the To company.

Employee count of pairings Company size comparison* 2017 2016

Unspecified employee count - 5300 4232

10-50 to >10K < 330 294

10-50 to 1001-5000 < 209 192

10-50 to 10-50 = 208 164

1001-5000 to 10-50 > 202 188

<10 to >10K < 199 199

101-500 to 10-50 > 190 146

10-50 to 101-500 < 169 152

51-100 to >10K < 134 109

>10K to 10-50 > 133 124

<10 to 1001-5000 < 123 136

As previously mentioned, a limitation of the dataset is the fact that not all companies provide the same level of detail in their partneringONE® profile, which is the case for employee number. Each year, the largest number of meetings took place between companies where one or both parties did not disclose their employee headcount. Among the companies who did provide this metric, the largest number of meetings were requested by smaller companies (10-50 employees) looking to meet with the largest companies (>10K), which was also the case in 2016. Meeting requests between smaller companies and mid-size companies (1001-5000) were higher in 2017, followed by smaller companies meeting with their peers (10–50 to 10–50). After a jump last year in pairings between <10 to >10K companies, this number remained the same in 2017, still making the Top 10 list. However, the 101–500 to 101–500 pairing group, which had entered the top 10 in 2015, remained out of the top 10 in 2017 as it did in 2016. This is consistent with the observed increase in B to P and P to P activity, as smaller companies may be looking for resources from larger groups [Table 8].


Partnering within anticancer researchOncology continues to be the most frequently disclosed therapeutic area (TA) of companies involved in BIO-Europe meetings, as either the requester or the recipient [Data not shown]. This large cohort of companies was consistently active at BIO-Europe each year, and approximately 70% of meetings each year included at least one oncology company. When limiting the dataset to companies

who listed oncology as the sole therapeutic area in their profile (specialty), meeting numbers dropped and comprise approximately 20% of all meetings for 2017. The number of meetings consistently increased for cancer companies’ year-on-year in both diverse (companies who include oncology as one of their multiple TAs) and specialty groups but the number of meetings really jumped in 2017 [Figure 4].

To identify BIO-Europe meeting trends within the oncology therapeutic sector, all companies who included “Neoplasms / cancer / oncology” as a therapeutic area in their partneringONE® profile were included, both meeting requesters and recipients. Although some of the meeting activity at BIO-Europe for these companies may be related to non-oncology indications, further limiting the dataset to groups who list oncology as their sole TA would skew the data towards trends of smaller biotechs.

As shown in Table 9, oncology companies continued to increase their meeting activity steadily each year from 2012 (4,666 meeting requests) to 2017 (7,182

meeting requests). While the average number of meeting requests per company has remained steady since 2012, the total number of meeting requests rose roughly 12% from 2016 to 2017. This is due to a larger total number of companies requesting meetings, which was fairly flat for several years reaching 767 in 2015, then 844 in 2016, to 932 total companies requesting meetings in 2017. The consistent average can likely be attributed to the fact that over 50% of companies requested between 1 to 5 meetings each year while approximately 26% requested 6 to 10. There is a slight increase in meeting requests in the 11 to 20 range and the remaining groups were relatively unchanged.

Note: Specialty refers to companies only listing oncology as a therapeutic area while diverse includes companies listing oncology as one of multiple therapeutic areas. Instances where a specialty company met with a diverse company are captured under “Oncology (specialty)”.

Figure 4. BIO-Europe meetings, by company’s oncology focus (requester and/or recipient company), 2012–17


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Table 9. Overview of BIO-Europe meeting activity for oncology companies (requester or recipient), 2012–17


2012 2013 2014 2015 2016 2017Total “From company” requests resulting in meetings 4666 5302 5828 5847 6426 7182

# “From company” requests resulting in meetings1 to 5 328 398 402 407 434 478

6 to 10 186 181 192 184 222 242

11 to 20 97 101 114 136 135 158

21 to 30 19 27 36 21 32 28

31 to 40 7 10 11 8 13 17

41 to 50 3 4 5 5 4 2

>50 2 3 3 6 4 7

Total “From companies” with meetings 642 724 763 767 844 932

Average # of meetings per “From company” 7.3 7.3 7.6 7.6 7.6 7.7

Examining the overall dataset, the clear leader for meetings involving all oncology companies was once again B to P, with B to P activity rising to a level slightly higher than in 2016. However, in 2017, B to B pairings among oncology companies rose much

higher, surpassing the P to P and P to B pairings. These last two pairings have also increased over time [Figure 5].

Figure 5. Number of BIO-Europe meetings between sectors for oncology companies (requester or recipient), 2012–17


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Location pairings for oncology companies were also tracked for 2017. As in previous years, US to US had double the number of pairings compared to other countries, and the usual players of Germany, UK, France, and Japan dominated the top 10. However, Switzerland did not make the top 10 while South Korea rejoined the list. Germany to Germany pairing remained in the top 10 overall, which has led among non-US pairings from 2014 through 2017. Among the remaining non-US pairings, there were virtually the same number of meetings at

BIO-Europe 2017 between UK to UK (77), Japan to Germany (75), Japan to UK (75), and UK to Germany (73). However, when comparing each pairing’s activity to the prior year, the number of meetings originating from the UK fell in comparison to 2016 meeting activity while those originating from Japan rose in 2017. France to Germany also decreased in meeting numbers but Japan to France increased. The rest of the main players engaging with the US continue to meet with each other within the anticancer space [Tables 10, 11].

Table 10. Top 10 country pairings at BIO-Europe 2017 by meeting count for oncology companies (requester or requestee)

Table 11. Top 10 non-US country pairings at BIO-Europe 2017 by meeting count for oncology companies (requester or requestee)

Source: partneringONE® 2018 Source: partneringONE® 2018

Countries of pairings 2017 2016United States to United States 310 247

United States to Germany 159 162

United Kingdom to United States 157 152

Japan to United States 142 66

United States to United Kingdom 141 156

Korea, South to United States 129 94


Germany to United States 105 132

Germany to Germany 101 96

United States to France 99 148


Countries of pairings 2017 2016Germany to Germany 101 96

United Kingdom to United Kingdom 77 94

Japan to Germany 75 45

Japan to United Kingdom 75 30

United Kingdom to Germany 73 82

Germany to United Kingdom 58 52

Korea, South to Germany 56 45

Germany to Japan 55 32

France to Germany 53 67

Japan to France 52 37

Table 12. Top 10 company size pairings by meeting count at BIO-Europe 2017 for oncology companies (requester or requestee)


* Company size comparison is relative to the From company. i.e. < indicates the From company is a smaller company size than the To company.

Employee count of pairings Company size comparison* 2017 2016

Unspecified employee count - 3555 3016

10-50 to >10K < 282 256

10-50 to 10-50 = 179 155

<10 to >10K < 145 142

1001-5000 to 10-50 > 141 132

101-500 to 10-50 > 138 132

10-50 to 1001-5000 < 129 129

>10K to 10-50 > 115 116

10-50 to 101-500 < 114 112

51-100 to >10K < 110 111

51-100 to 10-50 > 104 92

The majority of business meetings for oncology companies included at least one with an unspecified employee count. Among those with a disclosed headcount, opportunities continued to be sought most frequently in a similar pattern to companies discussed before—by small companies with the larger companies as smaller companies attempt to identify external resources and secure support to move therapies through development. The highest pairings again this year remained between the 10–50 to >10K companies. This was followed by the 10–50 to 10–50 pairing surpassing the <10 to >10K pairings as similarly sized companies form partnerships for both technology and co-development. Other categories that were very similar in meeting numbers included 1,001–5,000 to 10–50, 101–500 to 10–50 and 10–50 to 1,001–5,000, reflecting possible partnerships between mid-size and smaller companies with the same focus for technology and development advances [Table 12].


Partnership Deals Update (H2 2017-H1 2018): The Boom Continues…Finally, we analyzed all partnership deals in the broader biotech and pharmaceutical industry that involved a licensing component (excludes alliances involving trial collaborations that do not explicitly state licensing) for drugs with assets from the research phase through post-marketing worldwide from H2 2017 through H1 2018. The overall data showed continuing clear trends across therapy areas, phase distribution and payment types.

Partnership deal activity in Q3 2017 rose rather dramatically after a precipitous decline in Q2 2017 ($9.5bn; see prior report), with total deal volume in Q3 2017 of $17.2bn from 316 deals. The growth in both deal volume and value continued through the

end of 2017. 2018 began the new year with a slight downtick that intensified in Q2 as both deal volume and total value bottomed out (as historically seen in the 2nd quarter of each of the prior years) at 280 deals and $11.4bn, respectively. The beginning of the year is typical of robust partnering as companies return to the table at JP Morgan after the winter holidays. Dealmaking generally continues to increase as momentum increases over Q1 with an inflection point typically reached by the end of Q2 as a “spring/summer slowdown” ensues. In total, there were 1,283 partnering deals over the most recent review period, potentially worth up to $86.8bn if all milestones are received [Figure 6].

Figure 6. Total deal volume and value distributions H2 2017–H1 2018


Q3 2017 Q1 2018Q4 2017 Q2 2018

316

361 326

280

400

350

300

250

200

150

100

50

0

35,000

30,000

25,000

20,000

15,000

10,000

5,000

0

Deal

Vol

ume

Tota

l Dea

l Val

ue (U

SD m

m)

# Deals Total Deal Value


Oncology is still #1Looking at a therapy area specific view of the data, oncology deals continued to dominate in both number of deals and total deal value (defined as the sum of disclosed upfront payment(s) plus any announced or received milestone payments) over the time horizon. Oncology represented 24% of total deal volume (on par with 26% in the prior analysis), however, in terms of total deal value oncology accounted for an astonishing 38% [Figures 7, 8]. In comparison, the total deal value for oncology comprised 19% of total partnership dollars in the prior analysis, but 36% for two periods prior. Once again this speaks to the fact that companies

are continuing to invest in oncology therapies as promising new treatments continue to reach the market.

Deals for combination therapies (typically excluded from this analysis unless they include licensing component), immunotherapies and gene therapies continue to dominate the dealmaking landscape. At this time last year, CAR-T was in the hot seat for its first US approval and now with both Kymriah and Yescarta approved, the cancer partnering deal climate remains strong.

*Others includes other therapy areas and selected medical device and diagnostics deals.

Figure 7. Partnership deals by therapy area – Total H2 2017-H1 2018 by deal volume


Cardiovascular

Central Nervous System

Diagnostics

Endocrine, Metabolic and Genetic Disorders

Immunology and Inflammation

Infectious Diseases

Oncology

Others*

62 (5%)

167 (14%)

110 (9%)

102 (8%)

73 (6%)

99 (8%)291 (24%)

313 (26%)


Oncology

Infectious Diseases


Figure 8. Partnership deals total value by therapy area – H2 2017-H1 2018



Cardiovascular

Endocrine, Metabolic and Genetic Disorders


Ophthalmology

Others*

14%

7%

11%

7%

4%

38%

16%

3%

Milestones continue to dominate deal structuresHistorically bio bucks have been an essential component to partnership deals to balance risk and reward. On average, these delayed payments

accounted for over 50% of the total announced potential deal values [Figure 9].

Figure 9. Partnership deal breakdown by payment type


Q3 2017 Q1 2018Q4 2017 Q2 2018

30,000

20,000

10,000

0

Deal

Val

ue (U

SD m

m)

Total Deal Value MilestonesUpfront


Companies continue to take risks on large dealsThe top 10 licensing deals by total deal value (including all potential realized and unrealized development and commercial milestones) once again represented a disproportionate percentage of total disclosed deal value from H2 2017 to H1 2018 with 25.7% of the total value in the top 10 deals alone. The leading pack was very oncology heavy with one or more oncology assets licensed in seven of the top 10 partnerships. Aside from cancer, I&I and CNS deals also were present in the top 10 [Table 13].

BMS led the charge in partnering its Opdivo immunotherapy in combination with Nektar Therapeutics’ NKTR-214 for nearly $3.6bn in total value including roughly half the value upfront with the remaining half in potential milestone payments. In this deal BMS obtained exclusive rights in the indications including melanoma, renal cell carcinoma, non-small cell lung cancer, bladder

and triple negative breast cancer. BMS and Nektar originally joined forces back in 2016 with Opdivo and NKTR-214 as a trial collaboration, however, the current deal that includes joint development and commercialization rights now supersedes the original, which has been terminated.

It is worth noting that excluded from this analysis are some very large immunotherapy trial collaboration deals as they do not include a tangible licensing/exclusive rights component. Specifically, Merck’s July 2017 Keytruda alliance with AstraZeneca in combination with Imfinzi and Lynparza for up to $8.5bn and Merck’s Keytruda trial collaboration with Eisai’s tyrosine kinase inhibitor Lenvima for $5.8bn, are not included. At a combined value of $14.3bn, these two deals alone would significantly increase the deal values if included in Q3 2017 and Q1 2018, respectively.

Table 13. Top partnership deals by total deal value H2 2017-H1 2018 (deal value in millions of USD)

Deal Date Licenser Licensee Products/TechnologiesDeal

Value (USD mm)

Broader Therapeutic Area Royalty

2/14/2018 Nektar Therapeutics, Inc. (formerly Inhale Therapeutics Systems, Inc.)

Bristol-Myers Squibb Company

NKTR-214 in combination with Opdivo and Opdivo plu, NKTR214

$3,630 Oncology Share of the profits on sales of NKTR-214

2/20/2018 Sangamo Therapeutics, Inc. (formerly Sangamo BioSciences, Inc.)

Gilead Sciences, Inc. | Kite Pharma, Inc.

Adeno-associated viruses technology, Chimeric antigen receptors (CARs), Next Generation CAR T-Cell Immunotherapy KITE, NK cell receptors, T-cell receptros (TCRs), TCR therapy KITE PHARMA 1, TCR therapy KITE PHARMA 2, Zinc finger nucleases technology

$3,160 Oncology 1% – 9%

7/20/2017 Ablynx nv Sanofi Inflammation and Immunology Nanobody ABLYNX, Nanobody drug candidates, Nanobody Technology

$2,819 Immunology and Inflammation

Up to double-digit royalities

3/20/2018 Prothena Biosciences Limited | Prothena Corporation plc

Celgene Corporation | Celgene Switzerland LLC

Tau for cancer, Tau for inflammatory diseases, TDP-43, TDP-43 for inflammatory diseases, Undisclosed target for cancer, Undisclosed target for inflammatory diseases

$2,093 Inflammatory Disorders, Oncology

7% – 19%

2/20/2018 Wave Life Sciences Pte. Ltd.

Takeda Pharmaceutical Company Limited

Targets for Alzeimers’s disease, Targets for CNS, Targets for Parkinson’s disease

$2,060 CNS 7% – 17%

3/15/2018 Ionis Pharmaceuticals (formerly Isis Pharmaceuticals)

Akcea Therapeutics Inc.

Treatment of hereditary transthyretin amyloidosis (ATTR)

$1,880 Metabolic Undisclosed Royalty Rate


Phase still matters for dealmakersPartnership deals were also dissected by phase of the asset(s) at time of deal signing. Development phases reviewed were from preclinical through clinical development to marketed and post-marketed (Phase IV additional trials; Research deals were excluded from the analysis). Partnerships signed with assets at either preclinical or marketed phases garnered the lion’s share of the deal volume

as in prior analyses, while those deals involving an asset in the clinic also attracted quite a bit of interest. When looking at the data from a disclosed deal value, those partnerships that involved at least one preclinical asset greatly exceeded all others trailed by those deals that included at least one Phase I asset [Figures 10, 11].

9/14/2017 Halozyme Therapeutics, Inc.

Bristol-Myers Squibb Company

Drugs for immuno-oncology, Enhanze Technology

$1,865 Oncology Undisclosed Royalty Rate

10/18/2017 CureVac AG Eli Lilly and Company

mRNA cancer vaccines, RNActive Technology

$1,803 Oncology Tiered Royalties on Sales

11/14/2017 Loxo Oncology, Inc. Bayer AG | Bayer Consumer Care AG

LOXO101, LOXO195 $1,550 Oncology Tiered Double-digit Royalties

11/13/2017 ZymeWorks Inc. Janssen Biotech, Inc. (formerly Centocor Ortho Biotech, Inc.) | Johnson & Johnson | Johnson & Johnson Innovation

Azymetric Antibody Drug Conjugate Technology, Bispecific antibody therapeutics, EFECT Platform

$1,452 Oncology Tiered Royalties

Source: Medtrack; Strategic Transactions 2018

Figure 10. Partnership deal volume by phase


160

140

120

100

80

60

40

20

0

Deal

Vol

ume

Q3 2017 Q1 2018Q4 2017 Q2 2018

Preclinical

Phase I

Phase II

Phase III

Pending Approval

Post-Marketing

Approved

Marketed


Figure 11. Partnership deal value by phase


Post Marketing

Marketed

Approved

Pending Approval

Phase III

Phase II

Phase I

Preclinical

0 4000

Deal value (USD mm)

80002000 6000 10000 12000

Q2 2018 Q1 2018 Q4 2017 Q3 2017


Royalties: Sealing the Deal As part of the analysis we also examined deals with a royalty component and observed the average distribution of the royalty across both phase of signing and broader therapy area of the assets. As in the prior analysis those partnerships which included an asset at a later phase (including but not limited to approved, marketed and Phase III) involved the highest royalties, while those with preclinical assets brought in the lowest. While the trend in royalty rates has remained relatively constant over the past few periods, the actual royalty rates over the past year have varied across phases. Royalties for preclinical deals remained consistent hovering around the 8% mark. In the current period, however, royalties for Phase III products rose to 15.6%, exceeding both approved and marketed royalty rates (14% and 14.2% each). It is worth noting

that royalties for deals that included at least one approved product have varied quite a bit over the past few analyses from 11.7% two periods prior to 19.5% in the prior period to 14% in the current analysis. Looking at average royalties by therapy area, in the most recent period a stark reversal can be noted in which deals involving musculoskeletal assets dropped from highest in the prior period to the lowest average royalty at 4.5% in the current period (note that significance is low as the sample is only based on 4 records). Taking over the top spot for average royalty this year after others is dermatology at 14.5% (n=2) closely followed by infectious diseases (n=5) at 14.3%. In the current period royalties for oncology assets (n=30) fell in the middle at 11.8% (13.1% in the prior period, and 9.3% in the two analyses ago).

Figure 12. Average royalty rates by phase


16.0

14.0

12.0

10.0

8.0

6.0

4.0

2.0

0.0

Roya

lty R

ate%

Preclinical Phase I ApprovedPhase II Pending approval Marketed Phase III

7.8

12.914.0

11.7

14.215.6

13.5


What’s Next?With rising interest rates and the approaching Brexit deadline, we still see no slowdown in partnering activity in the healthcare space. As we look ahead there are many factors that could influence the

broader dealmaking climate and we will continue to follow these. New partnerships will be formed and old alliances revisited at this year’s BIO-Europe meeting.

Figure 13. Average royalty rates by therapy area



Others*

Dermatology

Infectious Diseases

Genitourinary Disorders

Respiratory

Ophthalmology

Gastroenterology


Oncology

Endocrine, Metabolic & Genetic Disorders


Cardiovascular

Hematology

Musculoskeletal0 2 4

Royalty Rate %

6 8 10 12 14 16

14.5

15.0

14.3

13.1

13.0

12.8

12.5

12.3

11.8

11.3

8.9

7.9

5.0

4.5

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